How to raise money for your startup

IED Lesson 9/2014

Frieda Brioschi / Emma Tracanella frieda.brioschi@gmail.com / emma.tracanella@gmail.com

9. Funding

Course program1. Italian Startups

2. Set up a startup in Italy

3. I've got an idea. And now?

4. Market and costs

5. Value analysis and business model

6. Business Model Examples and Pitch

7. Communicate

8. Being net

9. Funding

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9. Funding

Today's table of content

• Equity capital (seed investment, business angel, venture capitalist, crowd funding)

• Loan capital

• Other capital (announcements, access to credit)

• Hints

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9. Fundig

Being net: quick recap

Past slides available on Slideshare @ubifrieda:

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https://www.slideshare.net/ubifrieda/

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9. Funding

Being net: quick recap

During last lesson we discussed the launch of your product/company in term of communication analyzing Robert Scoble’s recipe:

“What you want to do is a story that travels to the people who are most likely to need your product. It all starts with a story”

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9. Funding

Being net: quick recap

Then we went through a startupper advise, Giuliano Iacobelli’s list of interesting and useful website:

• startup directories

• tech magazines

• magazines in your field/market

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9. Funding

Being net: quick recap

We started discovering on/off line resources, discussing what is an incubator and what are certified incubators and which characteristics have public, private and university incubators.

Then we approach a new way to work: coworking / with its italian examples and then we listed same networking recurring events.

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Being net: quick recap

We intruduce the concept of funding: how to rise money for your startup.

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Types of financing

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Types of financing

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• Equity

• Loan

• Other sources

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Equity capital

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• Ownership

• Willingness to take risk

• No interest and repayment

• Profit at exit (maybe…)

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Equity Capital - Sources!

• Parents, friends, …

• Seed Fund

• Equity Crowdfunding

• Business Angel (individual, network)

• Venture Funds

• Corporate Venture

• Stock Markets

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Seed Fund• From Idea to Prototype - to support the business until it can

generate cash of its own, or until it is ready for further investments

• Higher risk

• Not only $$ (mentorship, location, contacts,…)

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• 500startups, Ycombinator, Techstars, SeedCamp

• Dpixel, Start Up Design Lab e SeedLab

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SeedLab

SeedLab is an entrepreneurship program that provides micro-seed funding and in-class training and mentorship.

The program consists of an intensive track, to help innovators with a good technology or business idea build strongest business models, form effective teams and meet international investors.

Enterprenur are selected for: personal skills, idea proposed and qualification.

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Business Angels

• Angels typically invest their own funds for convertible debt or ownership equity

• Angel investment is a common second round of financing for high-growth start-ups

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Venture Capitalist

• Venture capital is the provision of high-risk capital by an investor to finance the startup and growth of a business in high-potential sectors.

• As a shareholder, the venture capitalist's return is dependent on the growth and profitability of the business.

16http://www.startupitalia.eu/blog/article/101-venture-capitalist

9. Funding

Crowdfunding

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• Crowdfunding is the collective effort of individuals who network and pool their money, usually via the Internet, to support efforts initiated by other people or organizations

• Interest and repayment starts immediately

• No ownership

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Crowdfunding: how it works?

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Crowdfunding models

• Donation based - donate money to support a cause

• Reward based - non-monetary rewards, often a product or a pre-series item.

• Social landing or peer-to-peer landing - receives an interest rate in exchage

• Equity based - receives shares of a company

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Crowdfunding models

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Kapipal

• Manifesto: your friends are your capital! Hence the name "Kapipal" ("Capital" + "Pal").

• International platform for personal crowdfunding (birthday or weeding presents, charity, etc.)

• 0% commission

• donation/reward based

• Founded in 2009

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9. Funding

Eppela• Reward based

• All or nothing

• Approved project only

• Open to everyone (legal people and entities public and private, associations and foundations). With a bank account!

• Founded in 2011

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Eppela - how it works

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Fattelo (su Eppela)

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http://www.eppela.com/ita/projects/272/fattelo

Website: www.fattelo.com

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Skyislands - the film (su Indiegogo)

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https://www.indiegogo.com/projects/skyislands-the-film

Website: www.skyislands.net

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BeCrowdy

• The first italian cultural crowdfundig platform

• Reward based

• All or nothing

• On line from april 4th 2014

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Equity crowdfunding in Italy

• In July 2013 Italy became the first country in Europe to implement a complete regulation on equity-crowdfunding.

• National registry for crowdfunding operators.

• Only for innovative startup

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Startsup• Equity based

• Is the first Italian portal authorized by Consob for the on-line collection of risk capital by innovative startups.

• It offers support towards the management of the project to:

• start-ups requiring capital;

• investors;

• start-ups that have already raised the needed capital.

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Unicaseed

• Equity based

• First investment company in the registry special section (bank and sim).

• Evaluation process

• Tutoring and support for the startup management (before and after)

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Loan Capital

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• Low willingness to take risk

• Interest and repayment starts immediately

• No ownership

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Loan Capital - Sources

• Banks

• Real Estates Funding

• Guarantee Schemes (through banks)

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Other Types

• Grant and Awards

• Funds

• Leasing

• Factoring

• Negotiate payments terms

• Sponsorships

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http://www.slideshare.net/bendtsen/financing-your-business

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Announcements

ACRI - Acri is an independent, non-profit, apolitical Association that represents the joint-stock Savings Banks and the Foundations of Banking Origin, the non-profit entities that came into existence in the early 1990s.

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(www.acri.it)

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Access to credit

Buonaimpresa – il credito cooperativo con i giovani che vogliono fare impresa

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(www.buonaimpresa.it)

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Sponsorship

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Networking!

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Remember

• Fundraising takes longer than you think

• There are periods of low investor activities (avoid late summer and winter holidays)

• A large amount of your funds may come from a few people. Find this super nodes and support them

• A large number of intros will lead nowhere and will waste your time.

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More…

• With investors there are leaders and followers: you will have higher conversion after getting a committed investor or two.

• Advisor and mentorship will become more important than connective

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Next week

• (Your) pitch.

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